Related Articles

SAN FRANCISCO— Around midnight on Christmas Eve of 2009, a handful of employees at Twitter received an unconventional holiday greeting from Dick Costolo, then the chief operating officer.

“It was an email that said, 'We have to move really, really fast. There's no time to rest because we have a massive opportunity in front of us,'" recalled Anamitra Banerji, who headed the team that built Twitter's first advertising product. “It was kind of crazy because we were all on break, but that attitude was exactly what we needed at Twitter.”

The company is now on the verge of fulfilling the opportunity Costolo foresaw as it prepares for the most highly anticipated initial public offering since Facebook's debut last May. The offering is expected to value Twitter at up to $15 billion and make its early investors, including Costolo, very wealthy indeed.

Yet Twitter's quick transformation from an undisciplined, money-losing startup into a digital media powerhouse took every bit of whip-cracking that Costolo could muster, along with a rapid series of product and personnel decisions that proved effective even as they disappointed some of the service's early enthusiasts.

Costolo was a comparative late-comer at Twitter, joining the company three years after it's 2006 launch, but the company increasingly bears his imprint as it hurtles towards the IPO: deliberate in decision-making but aggressive in execution, savvy in its public relations and yet laser-focused on financial results.

Costolo has not flinched in pruning and reshaping his management team, while Twitter, the company, has been ruthless in cutting off the smaller companies that were once a part of its orbit. A one-time comic actor who cut his teeth in business at Andersen Consulting before starting several companies, Costolo may never be as closely associated with Twitter as Mark Zuckerberg is with Facebook, yet he is arguably just as important.

“The founders consider Dick a co-founder, that's how deep the connection is,” said Bijan Sabet, an investor at Spark Capital and a Twitter board member from 2008 to 2011. “He's not this hired gun to run the company. He understands building out the business but also the product, strategy, vision.”

Twitter declined to make Costolo available for comment, citing the pre-IPO quiet period.

Birth of the promoted tweet

When Twitter's then-CEO Evan Williams brought on Costolo, an old friend and colleague from Google Inc, as COO in September of 2009, the three-year old company was already under pressure.

The microblogging service was gaining hip, young users at an unprecedented pace, and its trio of co-founders - Williams, Biz Stone and Jack Dorsey - had been splashed across magazine covers as the embodiment of San Francisco cool. Yet the whispers in Silicon Valley were growing louder: Twitter didn't have the technical chops to make the service reliable at huge scale, and it didn't have any way to make money.

“Having been on the core original team of engineers, we didn't have the skills among us to build a world class service,” said Alex Payne, an early Twitter engineer, noting that many of the team members came from smaller start-ups and non-profit organizations rather than established Web giants like Google.

Williams viewed fixing the site's notorious technical problems as the top priority but was ambivalent about the business strategy. For months, people familiar with the situation say, Williams weighed options ranging from display advertising to licensing Twitter's data to becoming an e-commerce hub to offering paid “commercial” accounts to businesses.

Costolo - who had sold Feedburner, an advertising-based blog publishing service he founded, to Google for $100 million - had no such doubts. By his second month on the job, he had helped persuade Williams to green-light engineering positions to build Twitter's first ad unit, which would become the “promoted tweet” - the cornerstone of Twitter's business today.

“Dick's conversations with Ev were key,” said Banerji, now an investor at Foundation Capital. “He had a fundamental belief that this was the future of Twitter monetization and said, 'You have to do it.”'

Over four months in early 2010, Costolo, working closely with Banerji and Ashish Goel, a Stanford engineering professor who specialized in the science of auction algorithms, to refine the promoted tweet. It resembled an ordinary Twitter message in every way, except that advertisers could pay for it to appear at the top of users' Tweet streams and search results.

Costolo threw his heft within the company behind the advertising strategy. In early 2010, as the ads team drew up a related product called “promoted trends,” Costolo privately told them to make sure he was in the room when they pitched the product to Williams, so it would get pushed through.

A central mechanism governing the promoted tweet was “resonance,” a concept coined by Goel. Because Twitter users can re-circulate or reply to tweets, including paid advertisements, the company had the real-time ability to gage which ads were most popular, and those ads could then be made more prominent. And because the ads appeared in the same format as other tweets, they were perfectly suited to mobile devices, which could not handily display traditional banner ads.

Paid ads that are inserted into a stream of status updates have since become something of an industry standard for mobile advertising. Its adopters include Facebook, which has enjoyed a 60 percent rise in its stock price in recent months due to its newfound success in mobile.

“The closest thing before this was the contextual advertising that Google was selling, but the problem was that it was clearly an ad,” said Charlene Li, the founder of Altimeter Group, an online research and consulting firm. “Promoted tweets look just like every other tweet. The form factor, the way it is displayed in stream - that was a breakthrough.”

When Costolo unveiled the promoted tweet in April 2010, Twitter announced it as a trial for only five brands, including Starbucks Corp and Virgin America, and users almost never saw the ads.

But by the summer of 2010, Costolo felt confident enough in his concept that he began seeking a deputy to ramp up the company's sales effort. For months, he courted Adam Bain, a rising star at News Corp, and at the same time began assiduously courting marketers, from corner suites on Madison Avenue to industry conferences on the French Riviera.

Under Bain, the Twitter ad team set it sites on the most lucrative advertising market of all: television. Twitter attached itself to TV programmers and major brand marketers by positioning itself as an online peanut gallery where TV viewers could discuss what they were watching.

“Hashtags,” which help people find the conversations they're looking for on Twitter, soon grew ubiquitous on TV, appearing in Super Bowl commercials, at Nascar races and on the Oscars red carpet.

“It wasn't easy for Twitter to explain to people why they should buy content on Twitter until they sold it as a companion to TV,” Ian Schafer, the chief executive of Deep Focus, a digital advertising agency. “Now you're even seeing the networks selling Twitter's inventory for them. That's magic.”

Twitter has steadily refined its targeting capabilities and can now send promoted tweets to people based on geographic location and interests. This month, the company paid more than $300 million to acquire MoPub, which will enable it to target mobile users based on websites they have visited on their desktop computers.

As the promoted Tweet became a reliable revenue engine -generating a substantial chunk of the estimated $580 million in ad sales the company is expected to earn this year - Twitter began to evolve the service beyond its 140-character text messaging roots. Tweets today can embed pictures, videos, page previews and are expected to eventually have more interactive features, including those for online transactions and deals.

Focused and ruthless

While Costolo has been widely credited with bringing management stability to a company that had struggled to find the right leadership formula among its three founders, he hasn't hesitated in making changes in the executive suite.

“Jack always said he 'edited' his team, and Dick looked at it the same way,” said a former employee. “He wanted to choose the top people around him, but he was ruthless with replacing his top people.”

Bain and Ali Rowghani, Twitter's influential chief operating officer, have emerged as Costolo's key deputies. A string of recent high-profile hires includes former TicketMaster CEO Nathan Hubbard as head of commerce; Geoff Reiss, former Professional Bowlers Association CEO, as head of sports partnerships; and Morgan Stanley executive Cynthia Gaylor as head of corporate development.

Meanwhile, once-powerful executives including product guru Satya Patel, engineering vice president Mike Abbott and head of growth Othman Laraki have left the company, with each departure stoking chatter about Twitter's unusual rate of employee turnover.

Rank-and-file employees described a chief executive who will pause from his workday to laugh with them at YouTube clips but who will also nudge them to put in long hours.

At a conference last fall, Costolo told the audience he had sought out a new office for Twitter in central San Francisco partly because it would allow employees who lived in the city to go home for dinner with their families and still come back to work at night.

Despite his on-stage charisma, several employees describe a CEO who can seem aloof.

“He's always very cordial,” said one former employee. “But try to get into a deeper conversation with him, and he's thinking about how much time he has to do that, because his schedule is tight and he has a lot to do. He's all business.”

Costolo's single-minded focus on Twitter's business goals has not been welcomed by everyone. It alienated many early Twitter enthusiasts who were interested in the political, social and technical potential of a unique new service that could fairly claim to express the sentiment of the world in real time.

Twitter has slowly shut off third-party access to its data, preferring to keep the information for its own business purposes. It has cut off many developers that want to build new features that would interact with the Twitter platform.

Its status as the most aggressive of all the global Internet companies in defending free speech and protecting its users from government spying is also in question. After years of essentially ignoring foreign governments that wanted it to comply with local laws, it announced last year that it had developed the technical capability to block Tweets by country, and it has recently begun to use it in countries including Germany and Brazil.

Twitter is currently banned in China, where the country's own Twitter-like service, Sina Corp's Weibo, has 500 million registered users.

“The most obvious effect of the IPO will be that it will push Twitter to go more international,” said Jillian York, the director for international freedom of expression at the Electronic Frontier Foundation.

“I don't think there's much evidence that their position on free speech has softened in the U.S, but internationally, yes. I think they've absolutely run into the complexities of opening offices in other countries, potentially even made some promises that they couldn't keep.”

Yet Costolo has clearly kept his biggest promise: turning Twitter into a major media business. And in that regard, the IPO may be just the beginning.

Manned deep space missions are still a long way off, but space agencies are already testing procedures, equipment and human stamina for operations in extreme environment conditions. Small groups of astronauts take turns in spending days in an underwater lab, off Florida’s southern coast, simulating future missions to some remote world. VOA’s George Putic reports.

Video

Manned deep space missions are still a long way off, but space agencies are already testing procedures, equipment and human stamina for operations in extreme environment conditions. Small groups of astronauts take turns in spending days in an underwater lab, off Florida’s southern coast, simulating future missions to some remote world. VOA’s George Putic reports.

Video

Fifty years ago, lawmakers approved, and U.S. President Lyndon Johnson signed, the Voting Rights Act of 1965. The measure outlawed racial discrimination in voting, giving millions of blacks in many parts of the southern United States federal enforcement of the right to vote. Correspondent Chris Simkins introduces us to some civil rights leaders who were on the front lines in the struggle for voting rights.

Video

Billions of dollars of so-called ‘dirty money’ from the proceeds of crime - especially from Russia - are being laundered through the London property market, according to anti-corruption activists. As Henry Ridgwell reports from the British capital, the government has pledged to crack down on the practice.

Video

Ottawa, Illinois, is the hometown of W.D. Boyce, who founded the Boy Scouts of America in 1910. In Ottawa, where Scouting remains an important part of the legacy of the community, the end of the organization's ban on openly gay adult leaders was seen as inevitable. VOA's Kane Farabaugh reports.

Video

Artificial limbs, including the most complex of them – the human hand – are getting more life-like and useful due to constant advances in tiny hydraulic, pneumatic and electric motors called actuators. But now, as VOA’s George Putic reports, scientists in Germany say the future of the prosthetic hand may lie not in motors but in wires that can ‘remember’ their shape.

Video

A British pro-democracy group has accused Russia of abusing the global law enforcement agency Interpol by requesting the arrest and extradition of political opponents. A new report by the group notes such requests can mean the accused are unable to travel and are often unable to open bank accounts. VOA's Henry Ridgwell reports.

Video

Talks on a major new trade agreement among 12 Pacific Rim nations are said to be nearing completion in Hawaii. Some trade experts say the "positive atmosphere" at the discussions could mean a deal is within reach, but there is still hard bargaining to be done over many issues and products, including U.S. drugs and Japanese rice. VOA's Jim Randle reports.

Video

Earth is in the midst of its sixth mass extinction. The last such event was caused by an asteroid 66 million years ago. It killed off the dinosaurs and practically everything else. So scientists are in a race against time to classify the estimated 11 million species alive today. So far only 2 million are described by science, and researchers are worried many will disappear before they even have a name. VOA’s Rosanne Skirble reports.

Video

Scientists have long been trying to develop an effective protection and cure for malaria - one of the deadliest diseases that affects people in tropical areas, especially children. As the World Health Organization announces plans to begin clinical trials of a promising new vaccine, scientists in South Africa report that they too are at an important threshold. George Putic reports, they are testing a compound that could be a single-dose cure for malaria.

Video

The latest issue of 'New York' magazine features 35 women who say they were drugged and raped by film and television celebrity Bill Cosby. The women are aged from 44 to 80 and come from different walks of life and races. The magazine interviewed each of them separately, but Zlatica Hoke reports their stories are similar.

Video

The United States is promising not to give up its fight against what Secretary of State John Kerry calls the “scourge” of modern slavery. Officials released the country’s annual human trafficking report Monday – a report that’s being met with some criticism. VOA’s National Security correspondent Jeff Seldin has more from the State Department.

Video

Abandoned more than 50 years ago, the underground streetcar station in Washington D.C.’s historic DuPont Circle district is about to be reborn. The plan calls for turning the spacious underground platforms - once meant to be a transportation hub, - into a unique space for art exhibitions, presentations, concerts and even a film set. Roman Mamonov has more from beneath the streets of the U.S. capital. Joy Wagner narrates his report.

Video

Greece has replaced Italy as the main gateway for migrants into Europe, with more than 100,000 arrivals in the first six months of 2015. Many want to move further into Europe and escape Greece’s economic crisis, but they face widespread dangers on the journey overland through the Balkans. VOA's Henry Ridgwell reports.

Video

After the closure of a major rubbish dump a week ago, the streets of Beirut are filling up with trash. Having failed to draw up a plan B, politicians are struggling to deal with the problem. John Owens has more for VOA from Beirut.

Video

A U.N. climate conference in December aims to produce an ambitious agreement to fight heat-trapping greenhouse gases. But many local governments are not waiting, and have drafted their own climate action plans. That’s the case with Paris — which is getting special attention, since it’s hosting the climate summit. Lisa Bryant takes a look for VOA at the transformation of the French capital into an eco-city.